Utilizing 3PL services to make fixed logistics costs variable. Scaling the internal operations team down from 9 members to 2.

Tau Corporation is a pioneer in the damaged vehicle reuse business, selling and exporting vehicles damaged by accidents or natural disasters to more than 120 countries worldwide.

To optimize their logistics operations, they chose Sync Logistics as their third party logistics (3PL) service partner, consigning all parts of the entire logistics process to us. By doing so, Tau Corporation managed to make fixed logistics costs variable and focus on sales efforts.

We interviewed Mr. Ishida, Executive Officer and Deputy General Manager of the Sales Division*, and Mr. Hayano, Leader of the Shipping Department of the same division* about their reasons for choosing and adopting Sync Logistics’ 3PL services, and their future outlook.

(*affiliation and company position at the time of this interview)

A Damaged Vehicle Reuse and Recycle Business on a Global Scale

Description of business and the scope of the Sales Division’s Shipping Department

Ishida: Based on our corporate philosophy of “pursuing a recycling-oriented society where all things are reused and recycled,” we repair vehicles that have been damaged mainly by accidents and natural disasters, and sell and export them to customers in Japan and abroad.

There is a high demand for Japan’s damaged vehicles which are affordable, with about 1 million vehicles exported annually worldwide. On behalf of insurance companies and leasing companies, we collect damaged but repairable and reusable vehicles, and sell them on our auction site to the highest bidder.

We export to more than 120 countries, expanding our sales network worldwide.

The Sales Division (to which we belong) develops new markets worldwide and manages our auction site. The Shipping Department (where Mr. Hayano is a Leader), arranges and manages the shipping of auctioned vehicles for export.

Tau auction site：https://www.tau-trade.com/sal_frt/

Adopting 3PL Services for the Comprehensive Consignment of Logistics Operations

Reasons for working with Sync Logistics and consignment details

We started doing business with Sync Logistics about 6 years ago, when our employee who was in charge of sales in Mongolia at the time contacted a company that was reputed to be good at used car transport to Mongolia. Since that time, we’ve been consigning export arrangements and vanning to Sync Logistics.

At first, we only exported to Mongolia, but we gradually began to ask Sync Logistics to handle container transport and RORO transport to other countries. Currently, we consign almost 100% of our container transport for overseas exports to them. Last year, we exported 12,000 units.

Up until last year, we only consigned the arrangements and operations of vehicles to be exported from the time they entered the yard until they were loaded on ships, but starting this year we switched to 3PL services. We are now comprehensively consigning all logistics processes and management to Sync Logistics.

Aside from the usual export arrangements and shipping operations, the scope of consignment in 3PL covers transport arrangements to each port’s yard, dealing with local customers (consignees), and arrangements with logistics companies (shipping companies, transport companies, drayage companies) associated with these operations.

Background and reason for switching to 3PL services

Ishida: Comprehensively outsourcing our logistics operations was based on a management decision of “choosing and focusing” on business expansion and improving profits, in other words, the optimization of management resources.

Because our auction site is used by customers worldwide, the countries we sell to (destination countries) and sales volume vary depending on the auction results. With fluctuations in export volume, personnel costs in our shipping operations was a constant issue. Therefore, we went in the direction of making personnel costs variable using 3PL.

After considering several companies, we chose Sync Logistics.

High Levels of Responsiveness and Information Capacity were the Deciding Factors in Working with Sync Logistics

Reasons for choosing Sync Logistics as our 3PL partner

Ishida: We choose Sync Logistics for the high level of their responsiveness and information capacity.

They always respond to our questions promptly and politely, and they are very reliable because of their immense know-how and formidable networks as logistics professionals.They are also caring when we consult them on matters beyond their expertise. They do not say “We don’t know anything beyond this because we are a logistics company.” I can really feel they try to solve our problems in one way or another.

Hayano: Even in our daily operations, they have never refused us when we asked questions or made requests. They always cater to our requests, and they present various proposals after studying the request. For example, when we couldn’t secure space on one of the ships of the shipping company we work with, they introduced us to another company and even made the booking.

Also, when we lack information about the destination country, they provide us with local information such as “To export to this country, these repairs are needed, and this is the approximate cost.” They are highly capable in providing information, and they often save us because of their knowledge.

Ishida: Because of their sincerity, both management and our employees have peace of mind when working with them. I believe that this build-up of trust between our companies is what led us to doing more business together.

When our company president asked Sync Logistics about our company being a 3PL candidate, their sensitivity to information and the speed of their response stood out, and our discussions proceeded quite quickly.

Hayano: Their president and CEO’s business policy is also impressive. Mr. Ichiki said, “We want to create a system where our customers’ success leads to our company’s profits.” I felt that his stance of focusing on customers’ needs and requests was similar to our company’s policy. This made us decide that we could work together as partners.

The quality of services onsite

Hayano: In container transport where multiple vehicles are packed together, sometimes we receive complaints about scratches or other damages when the vehicles arrive at their destination. In such cases, Sync Logistics thoroughly inspects the damage, and if Sync Logistics is at fault, they take proper action. We appreciate this because there are hardly any companies that investigate the cause of damages.

There were also times when even the deadline for booking shipping has passed, they will check onsite and arrange for shipping on very short notice. Thanks to their flexibility, our transport always goes smoothly.

Turning Logistics Costs into Variable Costs through the Adoption of 3PL Services. Establishing a System that Allows us to Focus on Sales.

The results of adopting 3PL services

Ishida: By consigning all logistics operations to Sync Logistics and establishing an operating system through 3PL, we are able to focus on sales and make our shipping costs variable. With regards to human resources, by transferring shipping staff to other operations, we have scaled the number of shipping staff down from 9 to 1.5 to 2. Both operational and management efficiency have also improved.

We Want to Collaborate with Sync Logistics in Creating High Value-Added Overseas Logistics Services

Future prospects

Ishida: We’re thinking of creating a system that will strategically increase sales and export volume. To realize this, providing services that meet the needs of diverse customers is essential. For example, we can make it more convenient for overseas customers to send their payments, and improve local logistics.

Having said that, it is difficult for us, a company that does not specialize in logistics, to build logistics solutions that will satisfy all kinds of customers using only our resources. As a logistics company, Sync Logistics has immense know-how and formidable networks, and we hope to deepen our relationship with them as business partners, and work together on improving and developing logistics services centered on shipping.

Also, 90% of the products we have handled so far has been automobiles, but we are starting to focus on the export of used construction machinery, agricultural machinery, and forklifts, for which there is great demand mainly in newly developing countries. In addition to automobiles, we want to optimize the logistics of these products by consulting with Sync Logistics.

If we provide logistics solutions that are convenient for our customers, we will be able to add value to our products and sell them at a higher price, and we can expect increases in sales and export volume. The volume handled by Sync Logistics will also increase, leading to profits for both of our companies.

By creating such a virtuous cycle for our businesses with them, we hope to grow with them.

Tau Corporation’s office

Company Profile

Company Name: Tau Corporation
Description of Business: Purchase, sale and export of cars, trucks, automotive parts, oil, etc.; auctions; human resource services
Number of employees: 466 (consolidated, as of September 30, 2020)
URL：https://www.tau.co.jp/